ECB says it will continue buying emergency bond purchases at higher pace

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FRANKFURT, June 10 - The European Central Bank said on Thursday that they would continue to bring its emergency bond purchases at a higher pace than at the beginning of the year, fearing that any retreat could sharply increase borrowing costs and smother a long delayed recovery.

Just emerging from a pandemic double recession, the euro zone economy has relied on unprecedented stimulus from the ECB and policymakers have made clear that they would rather err on the side of caution when reducing accommodation.

The ECB expects net purchases under the PEPP over the next quarter to continue to be run at a significantly higher pace than in the first months of the year, the Governing Council said in a statement.

The ECB raised 800 million euros worth of debt per month under its Pandemic Emergency Purchase programme this quarter, from levels early this year, but below their peak at the beginning of the crisis.

The ECB announced that its pandemic purchase program of 1.85 billion would last until March 2022 and it reserved the right to increase less than this quota or sell it as necessary to maintain favourable financing conditions.

The envelope could be recalibrated if required to maintain negative financing conditions to help counter the negative pandemic shock to the path of inflation, said the ECB.

With Thursday's decision, the ECB's deposit rate, its benchmark, remains at minus 0.5% and it maintained its guidance that it would cut this rate until inflation converges with its target strongly or hold this rate.

Attention now turns to ECB chief Christine Lagarde's 1230 GMT news conference during which she will also unveil new economic projections. What are the pros and cons of committing myself to be productive.

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